Can you sell Pre-IPO shares immediately?

USA
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Yes, you can sell your pre-IPO shares. There are secondary markets wherein you can easily list and sell your shares to anyone who wants them.

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Secondary markets are usually an ideal option when you need to sell the pre-IPO shares immediately for cash. The trading process is an effortless buy and sell. There are some additional charges you pay in a trade like this.

For employees, there is one more method “Non-recourse financing”. It is not that common and in this employees do not wager the share rights because they believe the prices will rise. Employee Stock Options can also be sold via a tender offer.

Different Ways of Selling Pre-IPO

There are three ways in which you can sell your pre-IPO stocks. Here are some details on each method.

1. Secondary Markets

With Secondary markets, you have the opportunity to maximize your cash returns. It is quick and a feasible method to get liquidated. If you fall under the following categories then Secondary markets might be a good option for you.

  • When you don’t want to leave the upsides of holding stocks.
  • You wish to attain long-term values from such stocks.
  • You don’t have enough money to cover the costs of secondary markets.

You can try the alternatives listed below in such cases.

2. Non-Recourse Financing

Non-Recourse Financing sounds like a very heavy term but it basically means “cash advances”. When the holder wishes to enjoy the rights of being a shareholder but also needs money, he can exercise this method.

At the right time when you see a perfect exit, you can pay back whatever is due. Moreover, if the company goes bankrupt or you don’t find an exit, no liability rests upon you.

3. Tender Offering

The last option is Tender Offering. It is mostly suitable for employees. The company initiates this method to buy back the pre-IPO stocks from their employees. In return, they immediately pay back the holders.

Companies like Pinterest, DropBox, and Airbnb have done it and continue to do so to benefit the employees. The biggest perk of this method is that the full value of shares is given back to the employees.

Thus, depending upon the kind of pre-IPO stock you are holding, you can choose the way of selling them.